I recently changed primary care physicians, and as a result got my first physical since sometime when my age had the number “2” in the tens-place.

One result of this was an early-morning blood draw today, for which I had to fast (something I’m not particularly gifted at) in advance of the draw. No wonder I only go for physicals every ten years.

As I began to head out the door this morning, my initial plan was to grab Starbucks and a breakfast sandwich on my way to work. But I paused. I was faced with a Latte Factor decision. The Latte Factor (tm) is a concept from David Bach, a solid mainstream personal finance author. His presupposition is that most American consumers will stay normal, American consumers, and so he provides specific recommendations for tweaking spending at the margin to improve savings rates (though I don't think he uses that term). You can get a great flavor for Mr. Bach's work in my favorite of his books, The Automatic Millionaire (you should buy the book via my link at the bottom of this article, both for Mr. Bach's solid content, and to support DesignIndependence.com).

But now back to my morning. Rather than the fast-food option, a different choice would be to assemble my usual bowl of cereal and make my usual coffee, and find a creative way to bring the ingredients with me. In fact, it wasn’t all that creative: I put the coffee in a thermos, milk for my cereal in a travel cup, and covered my dry cereal with plastic wrap. Total incremental time, including dish clean up tonight: 10 minutes, max. And now I sit here cozily enjoying my cereal, sipping my coffee, and typing some words into my computer for you.

But did this decision matter financially? I’d say I saved $8 at Starbucks (latte and sandwich). We can safely divide that by an after-tax rate pay rate of 60%, which gets us to $8 / 60% = $13.33 in gross income for ten minutes of work. That’s $80 as an hourly rate, which is fair, as such things go. And certainly my chosen breakfast had fewer calories, less paper waste, and less delicious salt than my SBUX fare would have offered.

How about over a lifetime? Well, I get my blood drawn every ten years. Ignoring the time value of money and assuming ten more blood draws in my life (yes, I know the frequency will likely increase in the out-years, but those are the most discounted from a time value of money standpoint), we calculate un-discounted lifetime savings of $133.33, for making this same decision every time I get a blood draw.

Wow. Are you fired up yet?

The plain fact: This single decision had precisely zero measurable impact on my net worth. The $133 divided by my current net worth is statistically zero, and divided by my future net worth it’s even less than that.

And, given where we are on our journey, in any single instance our family can choose to spend money or not spend money for any specific "small" category or item (meals out, entertainment, vacations, hospitality, clothing, etc.), without significantly altering our trajectory to FI, though we cannot radically alter our habits regarding all these items without badly hindering our progress toward FI. It's like Paula Pant says - you can afford anything, but not everything. It's not about deprivation. It's about efficiency.

Here’s where it gets more interesting: Although this single decision (and any single decision) has minimal impact, the habits of frugality I’ve acquired have had an enormous impact. Over the last six-and-a-half years our family has been practicing and getting better at frugality. Even after excluding the enormous beneficial effect of student loan elimination, we have cut our recurrent monthly expenses from $5400 to ~$4000 per month, occasionally clocking in below $3500 per month. This reduction in expenses occurred even as our children’s extracurriculars and homeschooling expenses have increased, to say nothing of the grocery bill as the kids approach adolescence. We also live in a higher-cost-of-living area than we did at the time our expenses were higher (Raleigh is not high cost of living, but compared to a dying Illinois manufacturing town, it is higher; we were big-ballin’ in the QCA). A frugality mindset matters. If you’ll adopt it and keep it for a while, you will see big changes over time.

The other reason incremental micro-frugality doesn’t make much net worth difference for me is that, thanks to my frugal wife and my own improved habits, most of these savings opportunities are already baked in the cake, so to speak. On the other hand, if you’re just starting out with frugality and you have a morning coffee habit ($4 x 22 days per month), a lunch-out habit ($14 X 22 days per month), and you enjoy dinners out (conservatively $30 for one person, twice per week or 8 times per month), if you cut these activities down by 50%, you’ll achieve $318 per month in savings. Applying our 60% take home pay rate, this is good for $530 / month in gross income, or the equivalent of an asset of $159,000 at retirement, based on a 4% safe withdrawal rate (or an even larger asset if you think 4% SWR is too high).

So the paradox is this: It’s the big budget categories where the big wins live. Housing, taxes, food, transportation, utilities, and possibly tuition expenses. Getting these right really moves the needle, and getting these wrong may keep you from ever reaching financial independence.

I bring lunch every day (that's today's lunch) unless I am meeting with someone at lunch. This habit has big lifetime value in money, health, and time.

On the other hand, frugal habits in the “small” categories add up too, and cultivate the kind of mindset you want. Once you have some real wealth, you can vary your intensity in implementing any particular savings tactic based on your whims at the moment, knowing that your overall mindset and lifestyle will safely bring you to FI sooner rather than later.

Finally, although I accounted this breakfast as costing ten minutes, going to Starbucks would have cost at least that many minutes. I may very well have had a triple victory with my breakfast: I probably saved time overall, enabling me to write to you. Things we perceive as convenient or quick often aren't. I saved my health a little bit. I saved a pinch of money, and I reinforced the good habits that have gotten our family where we are today. All in all, my brown-bag breakfast (and lunch!) belong in the Win column.